How the ATM Affects the Way We Pay
22 Pages Posted: 26 Feb 2019
Date Written: 2019-02-01
Cash users withdraw money from automated teller machines (ATMs) to finance cash payments. However, most ATMs in the United States dispense only multiples of $20 bills. The paper first constructs a consumer's optimization model showing how the precise denomination of dollar bills available from ATMs affects consumers' decision whether to pay with cash or with (plastic) cards. Then, the paper uses various statistical techniques to conduct empirical analyses of consumers who choose to pay cash for transactions below a certain threshold payment amount and pay with cards for transactions exceeding that threshold.
Keywords: currency denomination, automated teller machines, ATM, consumer payment choice, payment methods, point of sale
JEL Classification: D9, E42
Suggested Citation: Suggested Citation